Best Buy reports third-quarter comparable sales declined 2.9%

Best Buy Co., Inc. announced results for the 13-week third quarter ended Nov.r 2, 2024 (“Q3 FY25”), as compared to the 13-week third quarter ended Oct. 28, 2023 (“Q3 FY24”).

“In the third quarter, our teams delivered an in-line non-GAAP operating income rate on sales that were a little softer than expected,” said Corie Barry, Best Buy CEO. “During the second half of the quarter, a combination of the ongoing macro uncertainty, customers waiting for deals and sales events, and distraction during the run-up to the election, particularly in non-essential categories, led to softer-than-expected demand. In the first few weeks of Q4, as holiday sales have begun and the election is behind us, we have seen customer demand increase again.”

“We are excited and feel well-positioned for the holiday season with compelling deals, inspirational in-store and digital merchandising and competitive fulfillment options,” Barry continued. “We continue to see a consumer who is seeking value and sales events, and one who is also willing to spend on high price-point products when they need to or when there is new, compelling technology. Thus, we are balancing our optimism in both the industry and our unique positioning with a pragmatic approach to likely uneven customer behavior going forward.”

Fiscal full-year 2025 comparable sales expected to decline

“We are adjusting our full-year comparable sales guidance to a decline in the range of 2.5% to 3.5%,” said Matt Bilunas, Best Buy CFO. “At the same time, we are maintaining our full year non-GAAP operating income rate of 4.1% to 4.2%, which represents slight expansion compared to FY24 on a 52-week basis.”

Bilunas continued, “For Q4 FY25, we expect comparable sales versus last year to be flat to down 3% and our non-GAAP operating income rate to be in the range of 4.6% to 4.8%.”

Best Buy’s updated guidance for FY25 is the following:

• Revenue of $41.1 billion to $41.5 billion, which compares to prior guidance of $41.3 billion to $41.9 billion
• Comparable sales of (3.5%) to (2.5%), which compares to prior guidance of (3.0%) to (1.5%)
• Enterprise non-GAAP operating income rate of 4.1% to 4.2%, which is unchanged
• Non-GAAP effective income tax rate of approximately 23.5%, which compares to prior guidance of approximately 24.0%
• Non-GAAP diluted EPS of $6.10 to $6.25, which compares to prior guidance of $6.10 to $6.35
• Capital expenditures of approximately $750 million, which is unchanged

Note: FY25 has 52 weeks compared to 53 weeks in FY24. The company estimates the impact of the extra week in Q4 FY24 added approximately $735 million in revenue, approximately 15 basis points of non-GAAP operating income rate and approximately $0.30 of non-GAAP diluted EPS to the full-year results.

Domestic Revenue

Domestic revenue of $8.70 billion decreased 3.3% versus last year primarily driven by a comparable sales decline of 2.8%.

From a merchandising perspective, the largest drivers of the comparable sales decline on a weighted basis were appliances, home theater, and gaming. These drivers were partially offset by growth in the computing, tablets, and services categories.

Domestic online revenue of $2.73 billion decreased 1.0% on a comparable basis, and as a percentage of total Domestic revenue, online revenue was 31.4% versus 30.6% last year.

International Revenue

International revenue of $748 million decreased 1.6% versus last year primarily driven by a comparable sales decline of 3.7% and the negative impact from foreign exchange rates, which were partially offset by revenue from Best Buy Express locations that have opened in Canada during FY25.